$1, 015, 195 29

The road on the 1st of July, 1867, was in operation to Julesburg, 377 miles, and receipts from all sources amounted to.... And expenses to....

Leaving the net earnings....

658, 880 54

356, 314 75

The receipts of the road from travel, emigration, and the business of the region tributary to it were greatly diminished in consequence of Indian difficulties. The rolling stock consists of 53 locomotives, 15 passenger and 875 other cars. The company express their intention to prosecute this enterprise with the vigor and efficiency that have thus far characterized its advancement.

On the 24th of October last you accepted, upon the report of the government commissioners, a section of twenty miles of the Central Pacific railroad of California, terminating at a point ninety-four miles distant from Sacramento.

On the 28th of January last, the vice-president of the company filed a map showing the definite location of said railroad from the Big Bend of the Truckee to Humboldt Wells. From the best information at my command, it appeared that this route possessed great advantages over all others, and I gave my "consent and approval" to the location, pursuant to the authority conferred by the second section of the act approved July 3, 1866, and forwarded the map to the Commissioner of the General Land Office, with directions to adjust the grant of lands upon the basis furnished by it.

On the 22d of July, 1867, this company forwarded to the department a map of a location from Humboldt Wells, via the north pass of Pequop and Toano mountains, the north point of the Ombe mountains, Red Dome Pass, and the north end of Salt Lake, to Weber river, a distance of two hundred and fourteen miles. The report of the chief engineer accompanying the map states that this line is the most direct and advantageous of the three that had been surveyed eastwardly from Humboldt Wells. It appears that the highest point is six thousand two hundred feet above the sea, and five hundred and eighty-five feet above Humboldt Wells, and is reached through a narrow valley with a grade of seventy feet per mile. From this height the line descends with a nearly uniform grade of six feet per mile for thirty-four miles through the north pass of the Pequop mountains, and along the slopes of the latter to the north pass of the Toano mountains. From thence it passes along a valley from one-eighth to a mile in width to the eastern base of those mountains, making the descent of seventeen miles with a grade ranging from sixty-two to seventy feet per mile. Seventy feet is the highest grade found on the line, and it occurs for short distances at two other places besides those mentioned. No very difficult or expensive rock cutting is required on this route. I informed the company that I was not prepared to approve this location.

A report upon this road, dated October 7, 1867, has been received from the government commissioners. They state that it crosses the Sierra Nevada mountains one hundred and five miles from Sacramento, at an elevation of seven thousand and forty-two feet above the sea. From the point where it was then built nine hundred and seventeen feet only must be overcome to reach the sum

mit, a distance of eleven miles. Between the 77th and 137th mile-posts there are fifteen tunnels of an aggregate length of five thousand one hundred and sixtysix feet. During the past year about fifty miles of road have been in progress of construction; the greater part lying on the eastern and western slopes of the Sierra Nevadas. Eighteen miles of the portion on the eastern slope are graded, and the track is being laid at the rate of about one-half mile per day. By the time these eighteen miles are laid, six more will probably be graded and ready for the track-layers, making in all twenty-four miles east of the summit. On the western slope a larger force of laborers is at work, and it is believed that with a favorable season the grading will be completed and the track laid over the summit before the snow occasions a suspension of work. The company have not been able, during the past season, to procure the requisite number of laborers, but it is expected that next season this difficulty will be removed. There is on hand iron sufficient to lay one hundred and ten miles of track, and enough more in transitu to lay fifty additional miles. In the snow belt the rails used weigh sixty-three pounds to the linear yard, and are put together with fish-joints instead of chairs. At Sacramento, the company have erected, along the river front, wharves and derricks capable of moving an immense freight from vessels to the cars. There are twenty-seven locomotives in use, and twenty more, with material for two hundred and fifty cars, are on the way from Atlantic. ports. There is on hand material for seventy-five cars. Eight locomotives recently purchased are being set up. The company report to the commissioners that thirty-seven thousand seven hundred and thirty-eight acres of land, granted to aid in the construction of the road, had been sold for seventy-seven thousand five hundred and seventy dollars, ($77,570,) the greater part upon a credit of five years.

The following table gives the gross earnings and expenses for the years 1865 and 1866, and for 1867 up to September:

The net profit, therefore, over operating expenses in thirty-two months is the large sum of one million five hundred and fifty thousand six hundred and ninety six dollars and twenty-nine cents ($1,550,696 29.)

Since the commencement of business operations, the company represent that they have paid to the United States government for taxes, stamps, &c., the sum of two hundred and eighty-eight thousand dollars ($288,000.)

At the date of my last annual report the Union Pacific Railway Company, eastern division, had constructed its road to Fort Riley, one hundred and thirtyfive (135) miles west from the initial point on the line dividing the States of

Kansas and Missouri. Since that date this company has constructed one hundred and fifty (150) miles of its road, which you have accepted. The government commissioners are now examining an additional section of twenty miles, completing the road for a distance of three hundred and five (305) miles from said initial point. The company report the road as provided with round-houses, repair-shops, turn tables, water tanks, sidings, &c., sufficient to meet the immediate wants of business, and that the necessary warehouses and depot buildings have been erected at the stations for the accommodation of passengers and freight. The equipment now in use consists of twenty-five (25) locomotives, eighteen (18) passenger and seven hundred and thirty-six (736) other cars. Contracts have been made for two locomotives, two passenger and one hundred and forty (140) other cars. Iron has been ordered sufficient to complete the road to the 335th mile, nearly all of which has been delivered.

The aggregate earnings of the company for ten months and fifteen days, from October 15, 1866, are represented to have been one million two hundred and twenty-six thousand four hundred and eighty-three dollars and eight cents, ($1,226,483 08) It is also represented that during the same period the business done for the government amounted to three hundred and fifty-eight thousand nine hundred and forty-nine dollars and forty-nine cents, ($358,949 49;) that the fifty per cent. retained therefrom is in excess of the interest paid by the government on the bonds issued to the company during ten months and fifteen days, six thousand one hundred and eighty-nine dollars and fifty-three cents ($6,189 53.)

A table is submitted showing that the amount retained by the United States Treasurer from that due the company on the government business, for the month of August last, is nearly eight per cent. per annum of the princicipal of the bonds issued to the company on account of the construction of the road. This would repay the principal at no distant period by the government business alone, should it be continued to the same extent. The payment of the bonds at maturity is therefore considered by the company to be fully assured, and the road as being built, so far as the government is concerned, simply by the loan of its credit for a term of years upon ample security, and without the actual expenditure of a single dollar from the public treasury. The company have organized and sent into the field, during the past year, three large surveying parties, and have already had careful instrumental examinations made, covering an aggregate distance of more than 1,300 miles. Two lines have been run from Fort Wallace to Denver, and an advantageous route discovered. One has been surveyed from Fort Wallace to the Arkansas river, and thence up the Purgatory valley, through the passes of the Raton mountains, to Fort Union, and with two lines thence, through the easternmost range of the Rocky mountains, to Albuquerque and Fort Craig, on the Rio Grande. Another has been examined up the valley of the Huerfano river, through the Sangre de Christo Pass, via Fort Garland, to the Rio Grande, and thence, via Santa Fé, to Albuquerque. Surveying parties, organized into two divisions, are now making a careful survey of two general routes from the Rio Grande to the Pacificone along the thirty-fifth parallel west from Albuquerque ; the other from Fort

to join the army of Mexico; and declares that the act shall not be appli cable to the widows and orphans of officers or enlisted men who had not served in or upon the borders of Mexico. The act of February 2, 1849, construes the second section of the act of 1848 so as to make it applicable to all those whose husbands or fathers remained in the service to the day of their death, or who received an honorable discharge, or died after their return home, of wounds received or disease contracted during the war, and in the line of duty. Successive acts of Congress were passed, from time to time, to which I need not specially allude. They all seem, except in reference to the widows of revolu tionary soldiers, to rest upon the obviously just proposition that in order to give a pension to the widow of an officer of the regular army, or to his children, if he died without leaving a widow, he must have died of a wound received, or else that the mortal disease was contracted during actual hostilities. Prior, therefore, to the act of 1862, neither the widow nor the children of such an officer were entitled to a pension by reason of his death resulting from disease contracted in time of peace, and such has been the ruling of the Pension Bureau.

The death of an officer in charge of a bureau in the War Department, by reason of disease contracted since the termination of the late war and during the time in which he was engaged in the performance of his official duties in this city, devolves upon his widow a pension right, not for a limited term of years, but during her widowhood. He is not subject to the imminent perils or to the exposure which in time of war make such havoc of human life. His duties are such as ordinarily appertain to an officer in the civil service. His appointment is for life, and assures him, under existing laws, pay and emoluments eighty-five per cent. greater than the salary of an officer of corresponding grade in the other departments, whose duties are equally laborious, and whose official tenure is far more precarious. This case is not exceptional. During peace the military is not in a greater degree than the civil officer exposed to casualties that endanger health, life or limb. The claim, therefore, of his widow upon the country, if he dies of disease then contracted, is not stronger than that of the widow of the civil officer, and our laws have never granted to the latter a pension by reason of the services and death of her husband. I recommend such an amendment of the law as will exclude from its benefits the widow or children of an officer of the army who shall die of disease not contracted, or from a cause not occurring during war and in the line of duty. The same provision should be applied to the navy, with such modifications as the arduous and peculiar character of the service may, in the opinion of Congress, require. Our legislation will then be in harmony with that which preceded the enactment of a law deemed expedient during a civil war in which the country needed the services of all her sons, and offered the highest rewards. to those who, on the field or the deck, imperilled their lives in saving her from dishonor and death.

Under our present legislation a pension unclaimed for fourteen months after the same has become due is not payable at the agency for paying pensions, but must be adjusted at the Third Auditor's office and paid by warrant on the

treasury. No good reason exists for the continuance of this practice. It would be better to regard a failure during a longer period to demand payment as presumptive proof that the right thereto had ceased by the restoration of the invalid to health and physical ability, the remarriage of the widow, or the happening of some other condition which, by law, determines it. A new application would then be required. The applicant's name should be restored, and the accrued pension paid as other pensions, if the presumption arising from the lapse of time be overcome by the proofs.

The applications for pensions, notwithstanding they have increased in number by reason of the recent modifications of the laws, have been determined with the utmost despatch, under the supervision of the efficient chief of the bureau. His report is worthy of the highest encomium for its comprehensiveness, perspicuity and brevity.

Our Indian relations have assumed a new and interesting aspect. The steady approach of emigration to the grounds heretofore devoted to the chase, and the rapid progress of the railroads pointing towards the Pacific and traversing the country over which the Indians from time immemorial have roamed, imperiously demand that the policy of concentrating them upon reservations should, whenever practicable, be adopted. Until recently there was territory enough to supply the demands of the white race, without unduly encroaching upon the districts where the Indians subsisted by hunting. This condition of things no longer exists. Christianity and civilization, with the industrial arts, are spreading over the entire region from the Mississippi to the Pacific. The Indians are in possession of vast tracts of country, abounding in precious metals, or rich in sources of agricultural wealth. These invite the enterprise of the adventurous pioneer, who, in seeking a home and fortune, is constantly pressing upon the abode of the red man.

By an inevitable law, two races, one civilized and the other barbarous, are being brought face to face. The obligations which rest upon the government extend to both. Each is justly entitled to protection. Our duty requires us to devise a system by which civilization, with its attendant blessings, may be fostered and extended, and at the same time protection be secured to the tribes.

The estimated number of Indians is about three hundred thousand, spreading from Lake Superior to the Pacific ocean. Those east of the Mississippi, with few exceptions, are on reservations; so also are the tribes in Kansas north of the Arkansas, and those located between the western border of Arkansas and the country known as the "leased lands." Treaties were negotiated last winter with the Kansas tribes, and submitted to the Senate for its constitutional action. If ratified and in good faith executed, these tribes will be provided with homes, where they will soon become self-sustaining, as they have already adopted the habits of civilized life and become familiar with agricultural pursuits. They will then require from us little beyond protection against the intrusion of the whites, and the faithful performance of our stipulations.

A consideration of. the proper policy to be pursued in respect to the wild tribes presents more difficult questions. As long as they cling to their nomadic habits, and subsist by hunting and fishing, encroachment upon their hunting